Online advertising needs to grow up

A piece from the New York Times has reignited the debate over online advertising and the monetization of the “long tail” of the Web, one that got a boost recently with a post from Jeremy Liew, a venture capitalist at Lightspeed Venture Partners, who noted that in order to build…

A piece from the New York Times has reignited the debate over online advertising and the monetization of the “long tail” of the Web, one that got a boost recently with a post from Jeremy Liew, a venture capitalist at Lightspeed Venture Partners, who noted that in order to build a business with $50-million in revenue — pretty small beer in most circles — a site would have to have about gazillion page views a month (I’m rounding up).

As the ever-insightful Scott Karp of Publishing 2.0 writes, this rather depressing arithmetic exposes a fundamental problem with online advertising: namely, that the pricing is all out of whack when compared with regular print media, or pretty much any other “real world” media for that matter.

In a nutshell, most advertisers and ad agencies still see online advertising as something akin to direct mail, or junk mail, as most people refer to it. In other words, you send out billions of impressions a day and hope that some moron decides to send in that coupon, or sign up for your special travel deals, or order your Cialis knockoffs, or whatever. And my friend Rob Hyndman suggests that they might be right to see it that way.

As Scott and others have pointed out, however, this perception also has a lot to do with the fact that advertisers are still focused solely on the page view, and in part the Web industry is itself to blame for that, since page views are still one of the primary yardsticks by which sites measure themselves and others. Until we come up with something better — some measure of engagement, broadly defined — online advertising is going to languish.

The proposed recent “Do not mail” is an Opt-Out law. Only those not desiring advertising mail need opt-out. Anyone desiring advertising mail can do nothing – and continue to receive it. Why deny those wishing to avoid advertising mail the power to do so?

I do not consider handling unwanted advertising placed against my will on my personal property to be a civic obligation!

The US Supreme Court said in the Rowan case in 1970, â€œâ€œIn today’s [1970] complex society we are inescapably captive audiences for many purposes, but a sufficient measure of individual autonomy must survive to permit every householder to exercise control over unwanted mail. To make the householder the exclusive and final judge of what will cross his threshold undoubtedly has the effect of impeding the flow of ideas, information, and arguments that, ideally, he should receive and consider. Today’s merchandising methods, the plethora of mass mailings subsidized by low postal rates, and the growth of the sale of large mailing lists as an industry in itself have changed the mailman from a carrier of primarily private communications, as he was in a more leisurely day, and have made him an adjunct of the mass mailer who sends unsolicited and often unwanted mail into every home. It places no strain on the doctrine of judicial notice to observe that whether measured by pieces or pounds, Everyman’s mail today is made up overwhelmingly of material he did not seek from persons he does not know. And all too often it is matter he finds offensive.â€

Furthermore, the Supreme Court said, â€œthe mailer’s right to communicate is circumscribed only by an affirmative act of the addressee giving notice that he wishes no further mailings from that mailer.

To hold less would tend to license a form of trespass and would make hardly more sense than to say that a radio or television viewer may not twist the dial to cut off an offensive or boring communication and thus bar its entering his home. Nothing in the Constitution compels us to listen to or view any unwanted communication, whatever its merit; we see no basis for according the printed word or pictures a different or more preferred status because they are sent by mail.â€

We need a nationwide â€œDo Not Mailâ€ law to create a one-stop, convenient place for homeowners to give senders the aforementioned affirmative notice that we do not want certain kinds of mail sent to our homes.

If the US Postal Service would abide by its own rule, each homeowner could easily stop junk mail from getting into their mailbox by putting a written notice on their mailbox expressing their preference.

The US Postal Services practices are supposed to be according to the Domestic Mail Manual (DMM). The DMM contains provision 508.1.1.2 that says, â€œRefusal at Delivery: The addressee may refuse to accept a mailpiece when it is offered for delivery.â€ I interpret this rule to mean that if a homeowner wants to refuse an unwanted mailpiece (i.e. junk mail), the homeowner can do so when the mailpiece is offered for delivery. More to the point â€“ refuse it before it is put into the mailbox!

In practical application, since the postal carrier comes to homes at different times each day, the homeowner cannot be waiting at the mailbox to dialogue with the mail carrier about each mailpiece. The only realistic way to interpret 508.1.1.2 therefore is that the homeowner should post a notice on the mailbox telling the postal carrier about the homeownerâ€™s preference. The notice to the postal service must be specific and unambiguous. For instance, a homeowner should certainly be able to write, â€œNo mail that is not addressed to the Jonesâ€ because that does not require the postal carrier to make a subjective judgment. On the other hand, it would not be acceptable to write â€œno junk mailâ€ because the definition of â€œjunk mailâ€ is subjective and the mail carrier cannot decide.

Unfortunately, the US Postal Service has written to me that they will NOT honor a notice refusing mail, not matter how specifically it is worded, because the postal carrier does not have time to sort through the mail at my mailbox to pick out the pieces that are not addressed to me. Therefore, the US Postal Service is passing their sorting and disposing task onto me by putting all the mail they want into my mailbox, even though this seemingly violates 508.1.1.2.

Since the U.S. Postal Service will not abide by 508.1.1.2, homeowners need to stop unwanted mail at the source (i.e. by blocking the sender from sending it). We need a nationwide â€œDo Not Mailâ€ law to create a one-stop, convenient place for homeowners to give senders notice that we do not want certain kinds of mail sent to our homes.

This is an interesting argument as print media uses something very similar; readership/circulation.

If anything online advertising is better because, after reading the article it is not thrown away. That advertising will stay on that article, potentially forever.

Stay forever you say? Well, that depends on where you advertise. If you use the dreaded PPP or other similar services it likely will stay forever. If you advertise with the big boys it will not.

I see more and more people everyday who neglect to purchase print media because they can get it free online. Why shouldn’t they? You get to keep your fingers clean and save money! Besides, most big media companies that offer online news either charge a subscription or have so many ads on the page that it looks like a Splog!

I could not agree more and it is nice to see that other people are in tune with reality. I love the possibilities of the web too, but it occurs to me that some of these numbers being thrown around have to be hyped.

I write about startups all the time, and especially in the video venue. I think that many of these entities are “sharing” their numbers with other sites.

So the big question for advertisers (or one of them) should be: “How many times can we expect the same people to buy from separate places they visit for the same purpose?”

A larger issue might be, how many “same” registered users will buy anything on dissimilar sites they are registered on?

I enjoyed your post very much, and hope I added some food for thought.

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You can find me on Twitter at @mathewi, on Facebook and on LinkedIn, and I've been known to show up on Google+ from time to time. You can also contact me at mathew at mathewingram dot com and I will do my best to respond

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I'm a Toronto-based writer, and this is where I write about online media, technology and other interesting things I come across on the Web. I am a former senior writer at Gigaom, a former blogger, columnist, reporter and social-media editor at the Globe and Mail and a former writer with the Financial Times of Canada.